2 Service Sector Stocks Offer Two Decades of Rising Dividends and 3%-Plus Yields
By: Ned Piplovic,
Two companies in the service sector have rewarded their shareholders with almost two decades of rising dividends and yields of more than 3%.
While share prices of these two stocks struggled in the past 12 months, both stocks showed robust growth over the last decade. The combination of that long-term growth and the consistent record of rising dividends makes both of these stocks potential long-term plays for reliable dividend income and moderate asset appreciation.
Meredith Corporation (NYSE:MDP)
Meredith Corporation operates as a diversified media company that focuses primarily on the home and family marketplace in the United States. It operates in two segments, Local Media and National Media. The company’s Local Media segment consists of 16 television stations operating as affiliates for national networks, along with two independently operated television stations. This segment also includes 13 websites and approximately 40 applications focused on news, sports and weather-related information. Under the National Media segment, the company publishes about 20 magazines for women that include Better Homes and Gardens, Parents, Family Circle, Allrecipes, Rachael Ray Every Day, Martha Stewart Living, Shape and FamilyFun, as well as about 140 other special interest publications under approximately 90 titles with supporting websites and applications. Also, this segment offers digital and customer relationship marketing services, such as specialized marketing products and services.
Additionally, the company provides consumer database, custom content and brand licensing activities, as well as other related operations. The company was founded in 1902 and is headquartered in Des Moines, Iowa.
The share price experienced some volatility over the past 12 months. Between May and late October 2016, the share price dropped 10.5% to reach its 52-week low. Since its 52-week low, the share price rose 51% to reach its peak in late February 2017. The current price level is about 20% lower than the February share price and 8.1% above the price level in May 2016.
The current quarterly dividend distribution of $0.52 is equivalent to a $20.8 annual payout and a 3.9% yield. Compared to the 3.6%, five-year average yield, the current yield is almost 12% higher. Over the past 19 years, the company has hiked its annual dividend payout every year at an average annual growth rate of 12.6%. The result of this growth is a 10-fold increase in the annual dividend amount since 1997.
Owens & Minor, Inc. (NYSE:OMI)
Owens & Minor, Inc. operates as a health care services company in the United States, the United Kingdom, Ireland, France, Germany and other European countries. The company offers supply chain assistance to health care service providers and manufacturers of health care products, supplies and devices. Owens & Minor’s provides procurement, inventory management, delivery and product sourcing services for the health care market. Additionally, the company provides supplier management, analytics, inventory management, outsourced resource management, clinical supply management, business process consulting, warehousing and transportation services.
Furthermore, the company offers a portfolio of medical and surgical supplies products, which are either brand products purchased from original manufacturers or Owens & Minor’s own and proprietary private-label products. Owens & Minor, Inc. was founded in 1882 and is headquartered in Mechanicsville, Virginia.
After dropping about 12% from May to October 2016 and then rising 14% by early January, the company’s share price is currently back to October 2016 levels. While the current share price is 12.5% below May 2016 price levels, the long-term outlook for this stock should be much better, as the stock is 15% higher over the past five years, 300% higher since 2009 and more than 11-fold above its initial public offering price in 1988.
The company’s quarterly dividend is currently $0.2575, which translates to a 3.2% dividend yield and a $1.03 annual payout per share. The current yield is 10.3% higher than the 2.9% running average yield over the past five years. Because of a 13% average annual growth rate, the annual dividend amount rose more than 11-fold over the past 19 consecutive years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com